J. K. Trust, Bombay vs The Commissioner of Income-Tax/Excess Profits Tax, Bombay
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 246 of 1954
Decision Date: 22 May 1957
Coram: Natwarlal H. Bhagwati, J.L. Kapur, T.L. Venkatarama AIYAR
In the matter titled J K Trust, Bombay versus The Commissioner of Income‑Tax/Excess Profits Tax, Bombay, the Supreme Court delivered its judgment on 22 May 1957. The bench comprised Justices Natwarlal H. Bhagwati and J. L. Kapur. The petitioner, J K Trust of Bombay, appealed against the respondent, the Commissioner of Income‑Tax/Excess Profits Tax of Bombay, contending that certain income should be exempt from tax under section 4(3)(i) of the Indian Income‑Tax Act, 1922. The factual backdrop involved a deed of trust in which a sum of one lakh rupees was settled for the benefit of various charities named in the deed. The deed provided for the acquisition of the business of a managing agency on behalf of the trust, using the trust fund as part of the arrangement. Consequently, the trustees of the trust became the managing agents of a public company. The agency agreement stipulated a term of twenty years, but allowed the trustees to terminate the agency by giving three months’ notice. The agreement further prescribed that the managing agents would receive a remuneration equal to ten per cent of the net annual profits, subject to a minimum of fifty thousand rupees, together with an office allowance of one thousand rupees per month. The trust argued that the income derived from the managing agency constituted income from property held under trust, which was to be applied wholly to charitable purposes; therefore, it claimed exemption under section 4(3)(i). The tax authorities advanced three points of contention: first, that the income was remuneration for services rendered and not derived from any property, because a managing agency could not be regarded as property; second, that under the terms of the deed no part of the one‑lakh‑rupee sum was actually used to acquire the business, so the agency could not be characterized as property held on trust; and third, that even assuming the agency business qualified as property within section 4(3)(i), it was nevertheless governed by the special provision in section 4(3)(ia), and the conditions laid down in that subsection had not been satisfied, precluding any exemption. The Court held that a managing agency is indeed business that falls within the definition of property under section 4(3)(i). It relied on the authority of Lakshminarayan Ram Gopal and Son Ltd. v. The Government of Hyderabad (1955 I.S.C.R. 393) and on All India Spinners’ Association v. Commissioner of Income‑Tax, Bombay [1944] 12 I.T.R. 482. While recognizing that the office of managing agency carries certain obligations, the Court observed that, in law, a trust may be created over such property even if it is burdensome, and that a trustee may repudiate it if the obligations are overly onerous. Moreover, when trustees conduct business with the aid of the trust fund, the law treats the fund as having been employed in the business, even if it has not been actually invested. Considering both the deed of trust and the agency agreement, the Court concluded that the managing agency must be regarded as property held on trust, citing the cases Rocke v. Hart (1805) 32 E.R. 1009 and Moons v. De Bernales (1826) 38 E.R. 117. Consequently, the matter was remanded to the Bombay High Court for a determination of whether the profits from the business would be exempt from taxation under section 4(3)(i) when the conditions of section 4(3)(ia) were not satisfied. The judgment pertained to Civil Appeal No. 246 of 1954, filed by special leave against the Bombay High Court order dated 6 October 1952 in Income‑Tax Reference No. 1 of 1952.
The Court explained that a trustee who is burdened with obligations may, if those obligations become overly onerous because of the duties imposed, be permitted to refuse or disengage from them. The Court further held that when trustees conduct business using the trust fund, the legal effect is the same as if the trustees had actually invested the fund directly in the business, even though in reality the fund may not have been physically placed into the enterprise. By combining the terms of the deed of trust with the conditions set out in the agency agreement, the Court concluded that the managing agency must be regarded as property that is held on trust. In reaching this conclusion, the Court relied upon the authorities Rocke v. Hart, (1805) 32 E.R. 1009 and Moons v. De Bernales, (1826) 38 E.R. 117. After making these observations, the Court directed that the matter be sent back to the High Court for a determination of whether the profits generated by the business would qualify for exemption from tax under Section 4(3)(i) of the Income‑Tax Act when the specific conditions prescribed in Section 4(3)(ia) had not been fulfilled.
The judgment was rendered in a civil appellate proceeding, identified as Civil Appeal No. 246 of 1954, which was entertained on a special leave from an order dated 6 October 1952 issued by the Bombay High Court in Income‑Tax Reference No. 1 of 1952. Counsel for the appellant included senior legal representatives, while counsel for the respondent also appeared. The judgment was delivered on 22 May 1957 by Justice Venkatarama Aiyar. The appeal challenged the High Court’s decision in a reference made under Section 66(1) of the Indian Income‑Tax Act, 1922, as well as under Sections 21 and 19 of the Excess Profits Tax Act, 1940, and the Business Profits Tax Act, 1947, each read in conjunction with Section 66(1) of the Income‑Tax Act. The dispute concerned the assessment of income tax for the years 1946‑47, 1947‑48 and 1948‑49, together with the assessment of excess profits tax for the periods ending 31 March 1946, 31 March 1947 and 31 March 1948. All of these matters arose from the same set of facts and involved the same questions of law. On 15 June 1945, three brothers—Sir Padampat Singhania, Lala Kailashpat Singhania and Lala Lakshmipat Singhania—who operated a business under the name Juggilal Kamlapat executed a deed of trust (Exhibit A). They earmarked a sum of one hundred thousand rupees for various charities, created the J. K. Trust, Bombay, and appointed themselves along with two other individuals, Lala Ramdeo Podar and Sir Chunnilal Mehta, as trustees. The deed stipulated, among other provisions, that the trustees could, using the trust fund and for the benefit of the trust, engage in any business they deemed appropriate, including establishing or operating a managing or selling agency for any company, and could commence, suspend or terminate such business, applying any profits to the trust’s objectives.
The trust deed granted the trustees extensive authority to conduct business and expressly authorized them to “raise or borrow money required for the purpose of the trust.” At that time Messrs. E. D. Sassoon and Co., Ltd. served as the managing agents of the public company known as Raymond Woollen Mills Ltd. The partnership of Juggilal Kamlapat, in which the three Singhania brothers were partners, purchased the shares held by Messrs. E. D. Sassoon and Co. in the mill, thereby acquiring a controlling interest. Subsequent to this acquisition the shareholders passed a special resolution on 3 September 1945 appointing the trustees of the J. K. Trust as the new managing agents of the company, replacing Messrs. E. D. Sassoon and Co., who then resigned. On 10 September 1945 the company executed a memorandum of agreement, annexed as Exhibit B, which formally constituted the trustees of the J. K. Trust, Bombay as its managing agents and set out the terms and conditions governing that appointment. It is significant that the five individuals named as trustees in Exhibit A were designated as managing agents in their capacity as trustees, and the agreement expressly provided that the term “managing agents” shall, unless excluded by or repugnant to the context, include the trustees then in office of the said trust or any other trust with which it may be amalgamated. The agency was to endure for a period of twenty years, but the trustees retained the right to terminate it by giving three months’ notice. Under the agreement the managing agents were to receive a remuneration equal to ten percent of the net annual profits, subject to a minimum payment of Rs. 50,000, together with an office allowance of Rs. 1,000 per month. Clause 7 stipulated that, for the duration of the agreement, the managing agents must maintain with the company a cash deposit of Rs. 1,00,000 (Rupees one lakh only) as security for the proper performance of their obligations, and that they were entitled to charge interest on that deposit at three and one‑half per cent per annum in addition to their remuneration. Clause 8 imposed on the managing agents an obligation to arrange loans and advances to the company as and when required, provided that such borrowing did not exceed Rs. 10 lacs at any time, and that they could, if necessary, guarantee such loans or advances from time to time. Clause 14 provided that, notwithstanding any other provision, all the terms and conditions of the agreement—including the period of appointment of the managing agents—could be varied or abrogated by mutual consent of the parties. After assuming their duties as managing agents under this agreement, the trustees, by a further agreement dated 14 May 1946, appointed Mr. Tej Narain Khaitan, the son‑in‑law of one of the three Singhania brothers, as their representative to carry out the managing‑agency work, granting him a remuneration of thirty percent of the annual income which would be derived from the agency.
Before the income‑tax authorities, the appellant argued that the receipts obtained from conducting the managing‑agency business were income derived from property held in trust for exclusively charitable purposes, and therefore exempt from tax under section 4(3)(i) of the Act. The tax authorities disagreed, holding that the receipts represented remuneration for services rendered by the trustees and were not derived from any trust property, so that they fell outside the exemption provided by section 4(3)(i). The authorities further observed that even if the managing‑agency business could be characterised as property within the meaning of section 4(3)(i), it would be subject to the special provision of section 4(3)(ia); because the conditions specified in that subsection were not satisfied, no exemption could be claimed. Consequently, the tax authorities allowed a deduction of Rs 30,000 per annum for the remuneration paid to Mr Khaitan under section 10(2)(x), and they held that the remaining amounts – Rs 23,287 for the year 1946‑47, Rs 36,786 for 1947‑48 and Rs 2,16,460 for 1948‑49 – were taxable under the applicable statutes.
Following applications made by the assessee under section 66(1) of the Act and the analogous provisions in the Excess Profits Tax Act and the Business Profits Tax Act, the Tribunal referred two questions to the High Court of Bombay for determination. The first question asked whether, on the facts, the commission earned by the managing agents for administering the Raymond Woollen Mills was income for services rendered and therefore not income derived from trust property or any other legal obligation, and consequently not exempt under section 4(3)(i). The second question inquired whether the business carried on by the trustees should be assessed under section 4(3)(i) or under section 4(3)(ia). The reference was heard by Chief Justice Chagla and Justice Tendolkar. They concluded that none of the Rs 1,00,000 settlement, which was the sole property placed in trust under Exhibit A, had been invested in the managing‑agency business; therefore the business could not be regarded as trust property and the income derived from it was not covered by the exemption in section 4(3)(i). Accordingly, they answered the first question against the appellant. Regarding the second question, the judges observed that it was unnecessary to pronounce on the issue because it was an undisputed fact that, even if section 4(3)(ia) were applicable, neither condition (a) nor condition (b) of that subsection had been satisfied, and thus no relief could be granted. The matters to be determined on appeal were (1) whether the income received by the trustees of J.K. Trust, Bombay, in their capacity as managing agents of Raymond Woollen Mills, Ltd., constituted income derived from trust property.
In this appeal the Court was asked to decide two questions: first, whether the income received by the trustees of J.K. Trust, Bombay, as managing agents of Raymond Woollen Mills, Ltd., should be characterised as income derived from property held on trust or from an obligation of a trust‑like nature; and second, whether the claim for exemption from tax on such income must be determined under section 4(3)(i) or under section 4(3)(ia) of the Income‑Tax Act. Counsel for the petitioner argued that the managing‑agency activity is a business and therefore constitutes property. He further maintained that the activity is property held on trust because the trustees carry it out on behalf of the trust, using trust assets and following the directions laid down in the trust deed. He added that, even if the activity were not held on trust, it would at least be held on an obligation of a trust‑like nature under the principle embodied in section 88 of the Trusts Act, and that consequently section 4(3)(ii) of the Income‑Tax Act should apply.
Counsel for the respondent did not dispute that the managing‑agency function is a business, but he contended that such an agency cannot be the subject of a trust. He explained that the agency merely involves the rendering of services, which cannot be described as property capable of being held on trust, and that the agency is an office rather than property. He further argued that the managing‑agency arrangement created under Exhibit B could not be regarded as trust property because it could be terminated at the trustees’ discretion upon three months’ notice, rendering it a precarious and fleeting form of property that could not sustain a trust relationship. He also submitted that section 88 of the Trusts Act was inapplicable because there was no property held on an obligation of a trust‑like nature.
The Court noted that the question of whether a managing‑agency arrangement is a business had previously been examined in Lakshminarayan Ram Gopal and Son Ltd. v. The Government of Hyderabad, where the issue arose in the context of excess‑profits tax on remuneration received by managing agents. The Supreme Court in that case held that the managing‑agency function is indeed a business and that the profits derived therefrom are properly assessable as business income under the Act. Accordingly, the Court observed that the proposition that a managing‑agency is a business is beyond dispute. The remaining issue, therefore, was whether that business could be treated as “property” within the meaning of section 4(3)(i) of the Act. The Court explained that the term “property” is of the widest import and, unless the statute provides a limitation, it includes every interest a person can acquire, hold, and enjoy. The Court further observed that business would ordinarily be considered property unless the legislation expressly excludes it. Section 4(3)(i) of the Act, under which the petitioner seeks exemption, provides that any income, profits or gains falling within certain classes shall not be included in the total income of the person receiving them. The Court proceeded to examine the language of this provision in the next part of its judgment.
The provision in section 4(3)(i) states that the total income of a person shall not include any income derived from property held under a trust or other legal obligation wholly for religious or charitable purposes, and where such property is held partly for those purposes, the income that is applied or set aside for application to them. When the Court examined merely the language of section 4(3)(i), it observed that the text contains no restriction that would limit the ordinary and accepted meaning of the word “property,” nor does it exclude “business” from that meaning. The Court further noted that there is judicial authority supporting the view that business constitutes property within the intent of section 4(3)(i). In the case of In re The Tribune, the issue was whether a trust created over the Tribune press and newspaper qualified as charitable under section 4(3)(i). A majority of the learned judges of the High Court held that the trust’s object was not entirely religious or charitable, and therefore the exemption could not be claimed. On appeal, the Privy Council reversed that judgment, declaring that the trust’s object was wholly charitable and fell within the exemption of section 4(3)(i), as recorded in In re The Trustees of the Tribune. The present appeal does not concern the merits of that Privy Council decision, and that decision does not affect the controversy before this Court. What is relevant is that, before the High Court, counsel argued that the term “property” should have the same meaning in sections 9 and 4(3)(i), pointing out that in section 9 the word was used in contrast to “business,” which is dealt with in section 10, and therefore “property” in section 4(3)(i) could not include business. The High Court rejected that contention, holding that the meaning of “property” in section 4(3)(i) could not be limited by the meaning given to the word in section 9, as noted in In re The Tribune. Before the Privy Council, the question of whether the business of the Tribune press and newspaper was property was not raised; the Board merely observed that the reference letter contained “no suggestion that the income under assessment is not derived from property held under trust declared in the 20th and 21st paragraphs of the will.” The same point later arose for decision in All India Spinners’ Association v Commissioner of Income‑tax, Bombay, where the assessee, an unregistered association formed to develop village hand‑spinning and hand‑weaving industries, collected subscriptions and donations and invested them in the purchase of raw cotton for poor labourers to spin into yarn, which was then woven into cloth and sold, the proceeds being applied to the Association’s purposes.
In the case of the Association, raw cotton was provided to impoverished labourers who were required to spin it into yarn; the yarn was subsequently supplied to the same labourers for the purpose of weaving it into cloth, and the finished cloth was then sold. The proceeds from the sale were taken by the Association and applied to its funds for the specific purposes for which it was established. The Association asserted that it was entitled to exemption under section 4(3)(i) on the basis that its income originated from property that was held in trust. The High Court disagreed, holding that the yarn and the cloth whose sale generated the income could not be classified as property held in trust, and therefore the exemption in section 4(3)(i) was inapplicable. On appeal, the Privy Council reversed the High Court’s decision, observing that “the property consisted of the Organisation and the undertaking as well as the fluctuating stock of yarn and cloth,” and it held that the exemption provided by section 4(3)(i) did apply. This judgment serves as direct authority supporting the appellant’s contention. In contrast, the respondent relied on the decision in Eggar v. Commissioner of Income‑tax. In that case a professor agreed to remit the remuneration payable to him by a university for delivering lectures for charitable purposes, but no deed of trust was ever executed. The issue was whether the amounts actually paid to the professor by the university were exempt from tax. The court held that they were not exempt, characterising the payments at the time of receipt as the professor’s private property, being remuneration for services rendered. Consequently, there was no source of income dedicated to a trust, and the decision was held to have no relevance to the matter before this Court. The weight of authority, therefore, clearly favours the view that a business can constitute “property” for the purposes of section 4(3)(i) of the Act. The respondent further argued that even if a business could generally be regarded as property within section 4(3)(i), a managing agency could not be treated as such because, under sections 2(9A), 87A and 87B of the Companies Act, it is merely an office involving the performance of services and the discharge of certain obligations, and that an office cannot be the subject of a trust. The Court could not accept this argument. In Angurbala Mullick v. Debabrata Mullick and The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, an office of trusteeship was held to be property, especially where emoluments were attached to it. By necessary extension, the same principle applies to the office of a managing agency, which is evidently a profit‑making and even alienable position under certain circumstances. While the office undoubtedly requires the performance of services, there is no reason to treat it as anything other than property capable of being placed in trust.
The Court observed that there is no inherent opposition between the performance of services and the concept of business, noting that many types of business, such as insurance operations and commission agencies, necessarily involve rendering services. The appropriate criterion, the Court explained, is whether the services constitute a regular source of income. Consequently, if the managing agency can be characterised as a business—as was previously held in Lakshminarayan Ram Gopal and Son Ltd. v. The Government of Hyderabad—the agency must accordingly be treated as “property” within the meaning of section 4(3)(i) of the Act. The Court further rejected the characterization of a trust of the managing agency as merely a “trust of an obligation.” It clarified that the arrangement is, in reality, a trust of property that carries certain obligations. Under law, there is no bar to creating a trust over property that is burdened with obligations; however, if those obligations render the trust unduly onerous, the trustee may be entitled to decline it. The Court then addressed the argument that, even if the managing agency were capable of being held in trust, the specific agency created by Exhibit B could not be so held because public charity, unlike private charity, must be permanent and cannot be revoked or terminated at the trustee’s option. The Court noted that this argument mistakenly confuses the nature of a public charity with the nature of property devoted to charitable purposes. While it is true that a public charity is intended to be perpetual and therefore enforceable as long as any property remains available for its objects, the Court explained that when an object becomes impossible to fulfil, the trust property is normally redirected to similar or allied charitable purposes under the doctrine of cy pres. Nevertheless, the trust property itself is subject only to the legal incidents that govern it. For example, if the trust property is a leasehold interest, it terminates when the lease ends; similarly, if trust property is alienated under conditions that bind the trust, it exits the trust. Such events do not, however, extinguish the trust unless no property remains at all with which the trust can be carried out. The Court cited the principle embodied in section 77(c) of the Indian Trusts Act, 1882, while noting that this provision applies solely to private trusts. Accordingly, the Court concluded that the trustees’ power to terminate the managing agency at any time—by giving three months’ notice—does not constitute a legal impediment to treating the agency as property that can be held in trust. Finally, the Court addressed the contention that, under the terms of Exhibit A, the properties which the trustees are to hold and possess—namely the sum of one lakh rupees, any donations, accretions, and investments in securities—could not be regarded as trust property because none of the amount was employed to acquire the business, thereby preventing the business from acquiring the character of an accretion.
In the present case the trust deed specifies that the trustees “hold and stand possessed of” the sum of one lakh rupees together with any donations or contributions received by the trustees, all accretions to that sum, and the investments in securities then existing or that may arise from time to time, and that this amount constitutes the property of the trust. The contention of the respondents is that, on the basis of these terms, the managing agency cannot be regarded as property held in trust because no portion of the one‑lakh‑rupee sum was actually employed in acquiring the business so as to give it the character of an accretion. The petitioners argue that although the one‑lakh‑rupee sum was supplied by the trustees as security under Exhibit B, that security was intended solely to ensure the proper performance of the trustees’ duties as managing agents and that the amount was not physically injected into the business itself. It must, however, be observed that clause 3 of the trust deed expressly provides for the acquisition of the managing‑agency business on behalf of the trust and states that such acquisition may be made “with the help of the trust fund.” The factual matrix shows that this provision was indeed acted upon, and a reading of Exhibits A and B together leads to the inevitable conclusion that both documents form an integrated scheme whereby the settlors, in clause 3 of Exhibit A, intended precisely the managing agency that was later acquired under Exhibit B. English authority is well‑settled that when trustees conduct a business using trust funds, the legal effect is the same as if the trust funds had been directly invested in the business, even though the funds may not have been physically placed in the enterprise. In Rocke v. Hart, Sir William Grant observed that a trader who deposits money with his banker effectively receives a benefit equivalent to having his own money at hand, and that such a situation should be regarded as “employment in his trade.” Similar observations were made by Lord Gifford in Moons v. De Bernales. Applying this principle, the Court is of the opinion that the term “property” in section 4(3)(i) of the Act is broad enough to include a “business.” Consequently, if the question were decided solely on the language of that sub‑section, the managing agency created under Exhibit B would be treated as property held on trust within the meaning of section 4(3)(i). Nevertheless, this view alone does not resolve the appeal in favour of the petitioner because the respondent raises a further issue. The respondent submits that, although the ordinary meaning of “property” under general law may be wide enough to encompass a business, when the term is read in context with section 4(3)(ia) it acquires a more limited sense, referring only to property other than a business. This latter contention constitutes the remaining point of dispute that the Court must address.
The Court explained that the second question referred for decision required a brief recapitulation of the statutory framework as it existed when the matter first arose. At that time the Income‑Tax Act contained only one provision that permitted exemption from tax on income derived from property held by a religious or charitable trust, namely section 4(3)(i). The pivotal issue was whether profits earned by a business that was conducted expressly for and on behalf of such a trust could be insulated from tax under that provision. In the case of Commissioner of Income‑Tax, Madras v. Arunachalam Chettiar, the Court, following the earlier House of Lords judgment in Coman v. Governors of the Rotunda Hospital, Dublin, concluded that the profits were not exempt. The Allahabad High Court reached the same conclusion in Lachhman Das Narain Das, In re. Subsequently, the Lahore High Court, in In re The Tribune, interpreted the word “property” appearing in section 4(3)(i) as being sufficiently broad to encompass a business, and therefore held that profits derived by trustees from such a business would qualify for exemption. Although that decision was later taken up before the Privy Council, the specific question of the scope of “property” was not pressed before that apex body.
Recognising the divergent authorities, the Legislature stepped in to clarify the law by inserting a new clause, section 4(3)(ia), which reads in full: “Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them: (ia) Any income derived from business carried on on behalf of a religious or charitable institution when the income is applied solely to the purposes of the institution and—(a) the business is carried on in the course of the carrying out of a primary purpose of the institution, or (b) the work in connection with the business is mainly carried on by beneficiaries of the institution.” Under this newly‑introduced provision, exemption is available only if the business satisfies at least one of the two conditions spelled out in sub‑paragraphs (a) or (b) and the income is applied wholly to the institution’s purposes. The amendment was expressly designed to limit the earlier, broader reading of “property” and to make the tax benefit contingent on a clear nexus between the business activity and the charitable or religious objectives of the trust.
The Department of Income‑Tax submitted that, because section 4(3)(ia) is a special provision dealing specifically with exemption for business carried on for a trust, any claim for exemption on profits of such a business must be founded upon that clause alone. Accordingly, when the conditions stipulated in section 4(3)(ia) are not fulfilled, the assessee cannot revert to the general provision in section 4(3)(i) and argue that a business constitutes “property” for the purpose of exemption. The Department relied upon the well‑known maxim “generalia non derogant specialibus” to support this position. This contention was examined by the Lahore High Court in Charitable Gadodia Swadeshi Stores v. Commissioner of Income‑Tax, Punjab, where the learned judges held that the failure of a business to meet either of the two conditions laid down in section 4(3)(ia) precluded the claim of exemption, even though the earlier, broader interpretation of “property” might have suggested otherwise.
In this case the Court observed that section 4(3)(ia) gave no reason why a business that fell within subsection 4(3)(i) could not be exempt from taxation. The Court explained that the main basis of the earlier decision was that the two categories mentioned in subsection 4(3)(i) and subsection 4(3)(i)(a) had been enacted as separate clauses, and therefore one clause did not exclude the other. The appellant relied on that earlier decision before the Tribunal, but the Tribunal considered the decision distinguishable. However, a reading of the Tribunal’s order showed that it was not fully satisfied with the correctness of the earlier decision. Consequently, when the appellant applied for a reference under section 66(1) of the Act, the Tribunal also referred the second question to the High Court for determination. The Bombay High Court, however, held that business was not “property” within subsection 4(3)(i), and therefore it was unnecessary for the High Court to express an opinion on that question. The Supreme Court now held that the word “property” in subsection 4(3)(i), standing by itself, can have a broader connotation that includes business, making it necessary to consider the second question that had been referenced. Counsel for both sides agreed that it would be more satisfactory for the question to be remitted to the High Court for a fresh determination. Accordingly the Court remanded the case to the Bombay High Court for a fresh disposal of the reference with particular regard to the second question. Regarding costs, the Court directed the respondent to pay the appellant the costs of this appeal as well as the costs of the hearing before the High Court. The High Court will decide the costs of any further hearing on remand. The appeal was allowed and the case was remanded.